G20 Summit

In the 13th G20 Summit held in Buenos Aires, Argentina, the G20 has called for further actions to regulate the Cryptocurrencies by July 2018. The world’s most influential Economics and, Financial Institution was expected by some quarters to draft an array of regulations, but they have instead passed over the task to the relevant global institutions.

The G20 has concluded that Cryptocurrencies are assets rather than currencies and they seek to have a concise framework to regulate this new technology in financial markets. But the group is cautious of the process and has asked for a risk assessment into drafting the set of regulations. The International Monetary Fund (IMF) and the Financial Stability Board (FSB)-institutions that assess financial systems worldwide- will present the risks posed by this process of drafting regulatory polices by April 2018.

Pundits explain such a move as an outcome of FSB Chairman’s Mark Corney, who advised the G20 not to impose regulations on Cryptocurrency just yet as they account for less than 1% of the Global GDP. Mr. Mark further explained in his letter to the G20 on the eve of the summit that even if all the Cryptocurrencies prices surged to their maximum potential, they would not, most probably, exceed 1% of Global GDP. This emerging development does not warrant, immediate action, he advised.

The G20 summit asked the Framework Working Group (FWG) to develop various approaches for consideration. The global leaders pointed out that the body should focus on taxes, competition, data and public expenditure aspects of the Cryptocurrencies. The findings would then inform their next agenda for the year in regards to Crypto-Assets. The FWG have to ensure that their results are specific to different countries economic environments.

In addressing the issue that ICO Markets abet money laundering, the IMF is expected to give a detailed report of capital flows across borders. This request shows that the G20 is demonstrating a particular concern to the allegations from many quarters that ICO Markets are used for money laundering activities and tax evasion. The IMF findings and recommendation will form the basis of G20’s policy formulation agenda in their October 2018 summit. The IMF has a deadline of July 2018 to present the findings and recommendations.

The G20 summit also called on the Organization for Economic Cooperation and Development (OECD) to present a code of liberalization on capital movements. In collaboration with the IMF, the OECD is expected to show how transparent the capital transfers have been in the wake of ICOs.

Finally, the Sustainable Finance Study Group (SFSG) is expected to give a full report on the options available for all G20 members in regards to Capital Ventures in regards to crypto-assets. It is clear that the G20 is alive to the shortcomings in ICO Markets ventures and seeks to protect private investments, develop capital formations and ensure sustainability of ICO Market ventures.

What To Expect

We expect the regulations development process to start from July 2018 presentation of findings by various bodies. The policy framework for ICO Markets and Cryptocurrencies are likely to be in place latest by next year. This gradual and systematic policy formulation process is attributed to the FSB letter to the G2O which pointed out that Crypto-Assets and ICO Markets do not pause any immediate threat to the Global Economy.

Reports have emerged that the G20 Summit is expected to deliberate on the Cryptocurrencies’ and ICO Markets’ activities in-depth. The Finance Ministers and Central Bank heads from the world’s top 20 wealthiest nations will be paying attention to the emerging use of Cryptocurrencies as security. The G20 communique draft read in part “cryptocurrencies lack the traits of sovereign currencies.” The communique suggests that the finance ministers and central bank chiefs from the most advanced countries in the world are already in consensus that the currencies are assets.

The summit being convened in Buenos Aires, Argentina is held in the wake of increased tax evasion by corporates and individuals who convert their wealth to Cryptocurrencies to evade taxation. The ICO Markets have seen increasing participation since the September 2017 debut. Hundreds of startup Blockchain technology firms have made tens of thousands of tax-free dollars ever since. In particular, Filecoin raised a total of close to $300,000 in its ICO venture.

However, the agenda of the summit-recognizing Cryptocurrency as assets-departs from the various regulators’ mission of regulating ICO Markets and Cryptocurrencies for economic growth, investment protection and capital formation for startup firms. While some countries like China have banned Cryptocurrencies, India shows non-commitment in addressing the issue, the SEC of US, AMF of France and FCA of the UK have initiated a policy to make up the process of developing ICO markets and Cryptocurrencies in their respective economies.

Hosted by President Mauricio Macri. The G20 summit will be attended by leaders of about forty-five countries and regional organizations. The attendees will represent the US, Canada, Russia, China, India, Japan, France, UK, Germany, South Africa, Brazil, Indonesia, Turkey and South Korea. Additionally, the European Union (EU), African Union (AU) and the Association of Southeast Asian Nations (ASEAN) will be represented by their respective presidents. The G20 members are a powerful Economics and Financial coordination force in the world as they collectively generate 85% of the world’s GDP and represent over 70% of the world’s population. Formed in 1999, the G20 has been, over the years, adopting decisions to regulate emerging global issues from a global standpoint.

What To Expect

As per the draft communique, it is expected that the G20 will deduce that Cryptocurrencies are assets. With such a proclamation, they will advise Economic and Financial leaders to introduce regulations that are customized for the specific markets. The summit will, further, propose approaches to imposing capital gains taxes on ICO markets to raise public revenues. In so doing, the ICO markets and Cryptocurrencies will be accepted as an emerging business idea.

Not only will such an endorsement prompt China to lift the Cryptocurrency ban, but we are likely to see a future lift on the Cryptocurrency advertisement bans by Google and Facebook. Most importantly, the world will get clarity of Cryptocurrencies and the way they can be exploited for the economic benefit both in the macroeconomics and microeconomic spheres.

Finally, we are likely to see a timely conclusion on the part of the US House of Representatives Committee of Finance Subcommittee on Capital Markets, Securities and investment process of enacting laws to regulate this new industry. The prices of Cryptocurrencies are likely to surge to unprecedented levels following this “endorsement.”